Results tracking ours and consensus forecasts

Cache’s 1Q18 revenue and NPI jumped 7.0% y-o-y and 10.0% y-o-y, driven by income from new acquisitions (nine-property Australian portfolio in Feb 2018, and the Spotlight warehouse in Mar 2017). Excluding the capital distributions in 1Q17, 1Q18 DPU fell 7.2% y-o-y to SGD1.51cts, as the SGD100m rights issuance in Sep 2017 expanded Cache’s unit base.

Portfolio occupancy improved q-o-q to 97.3% with WALE extended from 3.4 to 3.5 years at end-Mar 2018.

Proactive portfolio rebalancing to deliver growth

The portfolio acquisition completed in 1Q18, its largest to-date, has strengthened Cache’s growth profile, with Australia’s NPI contribution rising y-o-y from 15% to 20%, as its AUM share jumps from 17% to 28%.

Cache in Jan 2018 announced the divestment of Hi-Speed Logistics Centre for SGD73.8m, 7% above its last valuation.

Post the repayment of debt from the sales proceeds, we estimate aggregate leverage should improve to 35.2% from 38.5% as at end-Mar 2018. We estimate SGD110m in debt headroom for potential acquisition growth opportunities.

Updating for Commodity Hub master lease expiry

We have revised estimates with the expiry of the master lease at CWT Commodity Hub in Apr 2018, and its conversion to a multi-tenanted asset.

While CWT continues to lease 61% of the 2.3m sf premises, Cache has successfully secured 86% in committed occupancy beyond this expiry.

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